Hi, due to various reasons my wife and I have been in the UK for >183 days in the 5/4/2019 tax year. We are British Citizens, probably likely to remain UK tax resident for the medium term.
However, we have retained our US resident corporation which continues to trade and pay an income (I believe that for tax purposes this is an 'S' corporation in the US). My US accountant has completed my tax forms for 31/12/2018 year and we have got reported income (joint) on form 1040 of $60k in box 1 (wages) and then a further $65k in box 6 (which ultimately derives from box 17 on schedule 1, being income from an S corporation). On form 1040 summary we have been assessed to federal tax of $11k (this is after deductions for allowances and QBI).
I am now looking to complete our UK self assessments for 5/4/2019. I appreciate that I will need to pro-rata 9/12 of the 31/12/2018 US income and add 3/12 of the 31/12/2019 US income, to get to a 5/4/2019 equivalent for UK reporting purposes, but my main concern is where do I report the income from my form 1040 on my UK tax return? The employment income seems straight forward, but the corporation income I am unsure of (is it a foreign dividend or is it deemed to be partnership income).
Further, we appear to have only paid $11k federal tax on $125k of US income (joint), an effective rate of 8.8% but when I report this income (£ equivalent) on our UK tax returns (alongside some other rental income) I go into the 40% bracket and my wife is at the top end of the 20% bracket. This will result in a large UK tax liability, is this likely to be correct?
Any assistance / comments gratefully received.